Wednesday, September 14, 2011

President Barack Obama's jobs plan has raised concerns in top trading partner Canada because of measures that would restrict foreign companies from participating in infrastructure projects....

Obama has proposed a $447 billion package of tax cuts and spending measures to spur hiring and revive a stalled economy, but the plan will be difficult for the Republicans to support and parts of it may never materialize.

The so-called Buy American clause prohibits the use of foreign-made iron, steel and other manufactured goods in public works projects.

...Republicans, which control Congress, are likely to block the Buy American provision because they believe it delays infrastructure projects and causes supply chains to freeze up unnecessarily...

Canada is the largest U.S. trading partner, with two-way trade worth about $1.4 billion a day.

The U.S. Administration has just released details of the American Jobs Act. The Administration is proposing the inclusion of Buy American provisions as a part of the infrastructure funding proposal. Our government is committed to delivering free trade leadership and Canadians can count on our government to defend free and open trade on the world stage. In this fragile economic recovery, we know history has shown protectionist measures stall growth and kill jobs. I have instructed Canadian officials to initiate the consultation process that was established as part of the 2010 Canada-U.S. Agreement on Government Procurement. Our government will raise with the Obama Administration and Congress concerns regarding measures that impede access for Canadian workers and businesses to the U.S. market, as we did for earlier U.S. stimulus programs.

The text of Obama's American Jobs ActNameless Jobs Plan (heh) is available here, and Fast is correct to be concerned because Section 4(a) of the proposed legislation states quite clearly that "None of the funds appropriated or otherwise made available by this Act may be used for a project for the construction, alteration, maintenance, or repair of a public building or public work unless all of the iron, steel, and manufactured goods used in the project are produced in the United States." Section 231 contains another Buy American provision that's a carry-over from the 2009 Stimulus* Bill.

Speaking of the Stimulus*, as you may recall the extensive Buy American provisions in that law turned out, well, just about as poorly as the rest of the darned thing:

As I've already noted, the Stimulus* Bill's Buy American provisions have been an abject disaster - harming many US companies and literally causing the destruction of perfectly good raw materials out of fears that they didn't comply with a unnavigable labyrinth of bureaucratic regulations. And the GAO recently found that these same Buy American rules were creating massive inefficiencies in construction and manufacturing projects across the country. Awful.

Awful, indeed. And, of course, a clear sop to American labor unions. Good thing for us that Stimulus II: Son of StimulusObama's jobs plan will never, ever become law, as most everyone understands that it's a cynical campaign tool rather than a real attempt to improve the US economy (heck, even congressional Democrats think it's garbage).

Nevertheless, the inclusion of the Buy American provisions in Obama's new jobs plan is still important because, unlike the original Stimulus*, it wasn't drafted by protectionist congressional Democrats and instead came straight from the White House. Thus, it's a clear signal that the President is perfectly willing to use protectionism (or threats of protectionism) to advance his re-election campaign.

It's also further proof (as if you needed any more) that President Obama has no principled commitment to free trade and instead promotes or rejects it as the political winds demand. Given the 2012 election season and the dismal state of the US economy, those winds are going to be blowing in the wrong direction for the next 14 months. Thus, no one should be surprised when the President pushes more protectionist proposals, regardless of how they hurt our economy, irk our trading partners, embolden domestic protectionists or further undermine America's decades-old image as the world's free trade leader.